Microsoft Will Be Irrelevant In Mobile For At Least Another Year

The grim reality for Microsoft is that it'll be at least another year before anyone cares about what it's doing in mobile. The trouble is that by then, it could be too late to mount a comeback.

The latest: This week, Microsoft released Windows Mobile 6.5, the newest edition of its mobile operating system.

No one expected anything special. But even reduced expectations have gone unmet.

"Windows Mobile 6.5 isn't just a letdown -- it barely seems done," Gizmodo's John Herrman wrote in a review, adding "it's nowhere near the upgrade that Windows Mobile needs to be even remotely interesting."

The basic problem: While parts of the OS have been updated to look recent, the guts of the operating system are ugly and outdated.

An ugly smartphone operating system may have been acceptable several years ago when smartphones were expensive gadgets directed at business people, who just needed them to check email, make calls, or to browse a crappy version of the Web. Compared to old versions of Palm OS or the BlackBerry operating system, Windows Mobile may have come across as vibrant and sophisticated.

But today's smartphone is a different product aimed at a different audience: Consumers, who have no interest in sifting through Microsoft's arcane folders, menus, and ugly user interface, and just want something usable.

And while Windows Mobile ages, consumers have new, better, simpler options, namely Apple's iPhone OS and its many apps, RIM's BlackBerry, Google's Android, and Palm's WebOS. Add Nokia's Symbian and Windows Mobile, and that's six smartphone platforms -- only a few of which will end up long-term winners.

How will Microsoft fare? Over the past year, buyers have voted with their wallets, increasingly shunning Windows Mobile. Microsoft's share of the smartphone market dropped to 9% during Q2, from 14% the year before, according to Canalys. Apple's increased to 14%, and RIM's to 21%. Thus the sense of urgency.

Now Microsoft's challenge is to beat -- or at very least, match -- top consumer offerings, in style, sophistication, and services. That's not impossible, and if anyone has the money (and drive) to try and try again, it's Microsoft. But clearly Windows Mobile 6.5 is a rush patch job -- not the company's real effort.

So what's the real plan?

Microsoft is working on a major overhaul of Windows Mobile's guts, due in version 7 in about a year. We've heard good things about early progress, and even former Apple executives have told us to watch out for what's to come from Redmond.

Microsoft has tried to dominate the mobile gadget industry for more than a decade, with little success. Time and time again, Redmond continues to release mobile software that's hideous, bloated, and late. Why will Windows Mobile 7 be any different?

The bigger problem: Even Microsoft's best effort could be too late.

As the smartphone industry becomes a platform story, it's not just the operating system that matters, but all the apps that other companies have made for it.

Over the past year, Apple iPhone developers have made 85,000 apps, Google Android developers have made 10,000 apps, etc. Those numbers could easily double by this time next year as the platforms continue to evolve and improve.

Meanwhile, Microsoft still has a year left before it can even hit the reset button. Who's going to want to buy into that?